Mining boom needs rising power supply

Western Australia’s electricity consumption is expected to soar by 70 per cent in the next five years as a result of the rapidly expanding mining sector, a new report says.

The state’s Chamber of Minerals and Energy said that though this would significantly increase WA’s emissions, about 80 per cent of the new demand, which would be funded mainly by the private sector, was expected to be fuelled by new gas-fired power ­stations.

The figures will be released by the chamber this week as part of its State Growth Outlook paper.

They will add to debate about the impact of a price on carbon and tight supplies of gas in the state.

The business round table on the federal government’s proposed carbon scheme met on Friday in Canberra to voice its concerns. Big companies warned the federal government they had serious concerns about a carbon price when the dollar was at record highs, hurting manufacturing.

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Chamber chief executive
Reg Howard-Smith
told The Australian Financial Review that though the state’s increasing carbon footprint was an issue, from a global view it was better to have rapid development in a country such as Australia.

“What we are doing here is taking one for the greater good," he said.

WA and the rest of Australia were very efficient processors of minerals “relative to the rest of the world, so that has to be taken into account".

However, the fact that only a small part of the surge in electricity consumption is expected to be met by renewable energy will disappoint environmentalists.

Mr Howard-Smith said much of the state’s mining sector was remote from WA’s electricity grid, which was one condition for federal support of renewable energy projects needed to make such ventures viable.

However, groups such as the Sustainable Energy Association say that solar power could be as cheap as fossil- fuelled electricity by 2015, even without subsidies, and companies are not doing enough to invest in emerging technologies.

The substantial amount of gas needed to fuel the new power coincides with state industry concerns about rising gas prices amid tight supplies. Prices for local businesses renegotiating gas contracts jumped from $3 to $4 a gigajoule to $8 to $9 in the past two years as energy demands increased.

Producers say new long-term supplies are coming on stream at more affordable levels, a view backed by the new head of the state’s main electricity retailer and major gas redistributor, Synergy.

Trevor James said the company had recently completed deals for affordable gas to 2015, and he was becoming increasingly comfortable that similar longer-term deals could be won with projects such as the $43 billion Gorgon venture.